Black’s Law Dictionary, 6th Edition, page 1457
A charge by the government on the income of an individual, corporation,
or trust, as well as the value of an estate or gift. The objective
in assessing the tax is to generate revenue to be used for the needs
of the public.
[relating to money] burden laid upon individuals or property to support
the government, and is a payment exacted by legislative authority.
In re Mytinger, D.C.Tex. 31 F.Supp. 977,978,979. Essential
characteristics of a tax are that it is NOT A VOLUNTARY PAYMENT OR DONATION,
BUT AN ENFORCED CONTRIBUTION, EXACTED PURSUANT TO LEGISLATIVE
AUTHORITY. Michigan Employment Sec. Commission v. Patt,
4 Mich.App. 228, 144 N.W.2d 663, 665. …”
[Black’s Law Dictionary,
6th Edition, page 1457]
Cong. Rec. House June
7, 1932 Page 12238
Mr. Tilson: ". . . It is not a proper function of government
to support its citizens or furnish them with employment. The Government
has no funds of its own and no means of collecting funds except
by the strong arm of taxation, from the pockets of its citizens.
It can not properly take more than is necessary to economically
carry on the Government. It has no moral or constitutional right
to take more than this from its citizens. Anything taken beyond
this is an abuse of the taxing power. . ."
[Cong. Rec. House June 7, 1932 Page 12238]
Law Dictionary, 1856, Sixth Edition:
This term in its most extended sense includes all contributions
imposed by the government upon individuals for the service of the state,
by whatever name they are called or known, whether by the name of tribute,
tithe, talliage, impost, duty, gabel, custom, subsidy, aid, supply,
excise, or other name.
2. The 8th section
of art. 1, Const. U. S. provides, that "congress shall have power
to lay and collect taxes, duties, imposts, and excises, to pay,"
&c. "But all duties, imposts and excises shall be uniform throughout
the United States."
3. In the sense above
mentioned, taxes are usually divided into two great classes, those
which are direct, and those which are indirect. Under the former
denomination are included taxes on land or real property, and
under the latter taxes on articles of consumption. 5 Wheat. R. 317.
4. Congress have plenary
power over every species of taxable property, except exports.
But there are two rules prescribed for their government, the rule of
uniformity and the rule of apportionment. Three kinds of taxes,
namely, duties, imposts and excises are to be laid by the first rule;
and capitation and other direct taxes, by the second rule. Should
there be any other species of taxes, not direct, and not included
within the words duties, imposts or customs, they might be laid by the
rule of uniformity or not, as congress should think proper and reasonable.
5. The word taxes is,
in a more confined sense, sometimes applied in contradistinction to
duties, imposts and excises. Vide, generally, Story on the Const. c.
14; 1 Kent, Com. 254; 8 Dall. 171; 1 Tuck. Black. App. 232; 1 Black.
Com. 308; The Federalist, No. 21, 36; Woodf. Landl. and Ten. 197, 254.
Law Dictionary, 1856, Sixth Edition]
U.S. v. Butler, 297 U.S. 1 (1936):
". . . A tax, in the
general understanding of the term and as used in the constitution, signifies
an exaction for the support of the government. The word has never thought
to connote the expropriation of money from one group for the benefit
of another. . ."
v. Butler, 297 U.S. 1 (1936)]
City of Boise v. Ada County, 147 Idaho 794, 811 (Idaho 2009):
“Because taxation is a legislative function, a citizen's obligation to pay a tax 'is a purely statutory creation.'”
[City of Boise v. Ada County, 147 Idaho 794, 811 (Idaho 2009)]
Lane County v. Oregon, 74 U.S. 7 Wall. 71 71 (1868)
In his work on the Constitution, the late Mr. Justice Story whose
praise as a jurist is in all civilized lands, speaking of the clause
in the Constitution giving to Congress the power to lay and collect
taxes, says of the theory which would limit the power to the object
of paying the debts that, thus limited, it would be only a power
to provide for the payment of debts then existing. [Footnote
4] And certainly if a narrow and limited interpretation
would thus restrict the word "debts" in the Constitution, the same
sort of interpretation would in like manner restrict the same word
in the act. Such an interpretation needs only to be mentioned to
be rejected. We refer to it only to show that a right construction
must be sought through larger and less technical views. We may,
then, safely decline either to limit the word "debts" to existing
dues, or to extend its meaning so as to embrace all dues of whatever
origin and description.
What, then, is its true sense? The most obvious, and, as
it seems to us, the most rational answer to this question is that
Congress must have had in contemplation debts originating in contract
or demands carried into judgment, and only debts of this character.
This is the commonest and most natural use of the word. Some strain
is felt upon the understanding when an attempt is made to extend
it so as to include taxes imposed by legislative authority, and
there should be no such strain in the interpretation of a law like
We are the more ready to adopt this view because the greatest
of English elementary writers upon law, when treating of debts in
their various descriptions, gives no hint that taxes come within
either, [Footnote 5] while American
state courts of the highest authority have refused to treat liabilities
for taxes as debts in the ordinary sense of that word, for which
actions of debt may be maintained.
The first of these cases was that of Pierce v. City of Boston,
[Footnote 6] 1842, in which the defendant
attempted to set off against a demand of the plaintiff certain taxes
due to the city. The statute allowed mutual debts to be set off,
but the court disallowed the right to set off taxes. This case went,
indeed, upon the construction of the statute of Massachusetts, and
did not turn on the precise point before us, but the language of
the court shows that taxes were not regarded as debts within the
common understanding of the word.
The second case was that of Shaw v. Pickett, [Footnote
7] in which the Supreme Court of Vermont said,
"The assessment of taxes does not create a debt that can
be enforced by suit, or upon which a promise to pay interest can
be implied. It is a proceeding in invitum."
The next case was that of the City of Camden v. Allen,
[Footnote 8] 1857. That was an action
of debt brought to recover a tax by the municipality to which it
was due. The language of the Supreme Court of New Jersey was still
more explicit: "A tax, in its essential characteristics,"
said the court, "is not a debt nor in the nature of a debt. A tax
is an impost levied by authority of government upon its citizens
or subjects for the support of the state. It is not founded on contract
or agreement. It operates in invitum. A debt is a sum of
money due by certain and express agreement. It originates in and
is founded upon contracts express or implied."
These decisions were all made before the acts of 1862 were passed,
and they may have had some influence upon the choice of the words
used. Be this as it may, we all think that the interpretation which
they sanction is well warranted.
We cannot attribute to the legislature an intent to include taxes
under the term debts without something more than appears in the
acts to show that intention.
The Supreme Court of California, in 1862, had the construction
of these acts under consideration in the case of Perry v. Washburn.
[Footnote 9] The decisions which we
have cited were referred to by Chief Justice Field, now holding
a seat on this bench, and the very question we are now considering,
"What did Congress intend by the act?" was answered in these words:
"Upon this question, we are clear that it only intended by the
terms debts, public and private, such obligations for the payment
of money as are founded upon contract."
In whatever light, therefore, we consider this question, whether
in the light of the conflict between the legislation of Congress
and the taxing power of the states, to which the interpretation,
insisted on in behalf of the County of Lane, would give occasion,
or in the light of the language of the acts themselves, or in the
light of the decisions to which we have referred, we find ourselves
brought to the same conclusion, that the clause making the United
States notes a legal tender for debts has no reference to taxes
imposed by state authority, but relates only to debts in the ordinary
sense of the word, arising out of simple contracts or contracts
by specialty, which include judgments and recognizances. [Footnote
Whether the word "debts," as used in the act, includes obligations
expressly made payable or adjudged to be paid in coin has been argued
in another case. We express at present, no opinion on that question.
[Lane County v. Oregon, 74 U.S. 7 Wall. 71 71 (1868)]
Association v. Topeka, 20 Wall. 655 (1874):
“The power to tax
is, therefore, the strongest, the most pervading of all powers of government,
reaching directly or indirectly to all classes of the people.
It was said by Chief Justice Marshall, in the case of McCulloch v.
Md., 4 Wheat. 431, that the power to tax is the power to destroy.
A striking instance of the truth of the proposition is seen in the fact
that the existing tax of ten per cent, imposed by the United States
on the circulation of all other banks than the National Banks, drove
out of existence every *state bank of circulation within a year or two
after its passage. This power can be readily employed against
one class of individuals and in favor of another, so as to ruin the
one class and give unlimited wealth and prosperity to the other, if
there is no implied limitation of the uses for which the power may be
To lay, with
one hand, the power of the government on the property of the citizen,
and with the other to bestow it upon favored individuals to aid private
enterprises and build up private fortunes, is none the less a robbery
because it is done under the forms of law and is called taxation.
This is not legislation. It is a decree under legislative forms.
Nor is it
taxation. ‘A tax,’ says Webster’s Dictionary, ‘is a rate or sum
of money assessed on the person or property of a citizen by government
for the use of the nation or State.’ ‘Taxes are burdens or charges
imposed by the Legislature upon persons or property to raise money for
public purposes.’ Cooley, Const. Lim., 479.
Coulter, J., in
Northern Liberties v. St. John’s Church, 13 Pa. St., 104 says, very
forcibly, ‘I think the common mind has everywhere taken in the understanding
that taxes are a public imposition, levied by authority of the
government for the purposes of carrying on the government in all its
machinery and operations—that they are imposed for a public purpose.’
See, also Pray v. Northern Liberties, 31 Pa.St., 69; Matter of Mayor
of N.Y., 11 Johns., 77; Camden v. Allen, 2 Dutch., 398; Sharpless v.
Mayor, supra; Hanson v. Vernon, 27 Ia., 47; Whiting v. Fond du Lac,
v. Topeka, 20 Wall. 655 (1874)]
Bible, Proverbs 12:24, NKJV
"The hand of the diligent
will rule, but the lazy man will be put to forced labor."
Ashton v. Cameron County Water Improvement District No. 1, 298 U.S.
513; 56 S.Ct. 892 (1936):
"Like any sovereignty,
a state may voluntarily consent to be sued; may permit actions against
her political subdivisions to enforce their obligations. Such proceedings
against these subdivisions have often been entertained in federal courts.
But nothing in this tends to support the view that the federal
government, acting under the bankruptcy clause, may impose its will
and impair state powers-pass laws inconsistent with the idea of sovereignty."
"The power to regulate
commerce is necessarily exclusive in certain fields and, to be successful,
must prevail [298 U.S. 513, 532] over obstructive
regulations by the state. But, as pointed out in Houston, etc., Ry.
Co. v. United States,
234 U.S. 342, 353 , 34 S.Ct. 833, 837, 'this is not to say that
Congress possesses the authority to regulate the internal commerce of
a state, as such, but that it does possess the power to foster and protect
interstate commerce.' No similar situation is before us."
arising out of our dual form of government and the opportunities for
differing opinions concerning the relative rights of state and national
governments are many; but for a very long time this court has steadfastly
adhered to the doctrine that the taxing power of Congress does not extend
to the states or their political subdivisions. The same basic
reasoning which leads to that conclusion, we think, requires like limitation
upon the power which springs from the bankruptcy clause. United States
v. Butler, supra."
[Ashton v. Cameron County Water Improvement District No. 1, 298 U.S. 513; 56 S.Ct. 892
Welch v. Henry, 305 U.S. 134, 146 (1938)
We think that the selection of such income for taxation at rates
and with deductions not shown to be unrelated to an equitable distribution
of the tax burden is not a denial of the equal protection commanded
by the Fourteenth Amendment, U.S.C.A.Const. Amend. 14. It cannot
be doubted that the receipt of dividends from a corporation is an
event which may constitutionally be taxed either with or without
deductions, Lynch v. Hornby,
247 U.S. 339 , 38 S.Ct. 543; see Helvering v. Inde-
[305 U.S. 134, 144] pendent Life Ins. Co.,
292 U.S. 371, 381 , 54 S.Ct. 758, 760, even though the corporate
income which is their source has also been taxed. See Tennessee
117 U.S. 129, 136 , 6 S.Ct. 645, 647; Klein v. Board of Tax
282 U.S. 19, 23 , 51 S.Ct. 15, 73 A.L.R. 679; Colgate v. Harvey,
296 U.S. 404, 420 , 56 S.Ct. 252, 254, 102 A.L.R. 54. The fact
that the dividends of corporations which have to some extent borne
the burden of state taxation constitute a distinct class for purposes
of tax exemption, Colgate v. Harvey, supra; compare Travelers' Insurance
Company v. Connecticut,
185 U.S. 364, 367 , 22 S.Ct. 673, 674; Kidd v. Alabama,
188 U.S. 730 , 23 S.Ct. 401; Darnell v. Indiana,
226 U.S. 390, 398 , 33 S.Ct. 120, and that in consequence such
dividends have borne no tax burden, is equally a basis for their
selection for taxation. Watson v. State Comptroller,
254 U.S. 122, 124 , 125 S., 41 S.Ct. 43, 44; Klein v. Board
of Tax Supervisors, supra. Any classification of taxation is permissible
which has reasonable relation to a legitimate end of governmental
action. Taxation is but the means by which government distributes
the burdens of its cost among those who enjoy its benefits. And
the distribution of a tax burden by placing it in part on a special
class which by reason of the taxing policy of the State has escaped
all tax during the taxable period is not a denial of equal protection.
See Watson v. Comptroller, supra, page 125, 41 S.Ct. page 44. Nor
is the tax any more a denial of equal protection because retroactive.
If the 1933 dividends differed sufficiently from other classes of
income to admit of the taxation, in that year, of one without the
other, lapse of time did not remove that difference so as to compel
equality of treatment when the income was taxed at a later date.
Selection then of the dividends for the new taxation can hardly
be thought to be hostile or invidious when the basis of selection
is the fact that the taxed income is of the class which has borne
no tax burden. The equal protection clause does not preclude the
legislature from changing its mind in making an otherwise permissible
choice of subjects of taxation. The very fact that
[305 U.S. 134, 145] the dividends were relieved of tax,
when the need for revenue was less, is basis for the legislative
judgment that they should bear some of the added burden when the
need is greater.
Numerous retroactive revisions of the federal and Wisconsin revenue
laws, presently to be discussed, have imposed taxes on subjects
previously untaxed and shifted the burden of old taxes by changes
in rates, exemptions and deductions. It has never been thought that
such changes involve a denial of equal protection if the new taxes
could have been included in the earlier act when adopted. If some
retroactive alteration in the scheme of a tax act is permissible,
as is conceded, it seems plain that validity, so far as equal protection
is concerned must be determined, as in the case of any other tax,
by ascertaining whether the thing taxed falls within a distinct
class which may rationally be treated differently from other classes.
If such changes are forbidden in the name of equal protection, legislatures
in laying new taxes would be left powerless to rectify to any extent
a previous distribution of tax burdens which experience had shown
to be inequitable, even though constitutional.
The bare fact that the present tax is imposed at different rates
and with different deductions from those applied to other types
of income does not establish unconstitutionality. It is a commonplace
that the equal protection clause does not require a state to maintain
rigid rules of equal taxation, to resort to close distinctions,
or to maintain a precise scientific uniformity. Possible differences
in tax burdens, not shown to be substantial, or which are based
on discrimination not shown to be arbitrary or capricious, do not
fall within the constitutional prohibition. Lawrence v. State Tax
286 U.S. 276, 284 , 285 S., 52 S.Ct. 556, 558, 559, 87 A.L.R.
374, and cases cited.
Just what the differences are in the tax burdens cast upon the
two types of income by the divergence in rates [305
U.S. 134, 146] and deductions applied to them does not
appear. The burden placed on dividends by the taxing act might have
been greater if they had been included in gross income and taxed
on the same basis as other income since, in that case, the resulting
increase in net income would be taxed at the rates applicable to
the higher brackets. When the challenged statute was enacted there
were available to the legislature the returns for the taxable year
showing the different classes of income, the application to them
of the existing law, and the effect of existing rates and deductions.
There were also data to be derived from the corporation tax returns
showing what part of the exempted dividends had their source in
corporate income which had been taxed to the corporation and what
part was attributable to corporate income not similarly taxed. The
legislature was free to take into account all these factors in prescribing
rates and deductions to be applied to the newly taxed dividends
so as to arrive at an equitable distribution of the added tax burden.
In the absence of any facts tending to show that the taxing act,
in its purpose or effect, is a hostile or oppressive discrimination
against the recipients of dividends who have been hitherto fortunate
enough to escape all taxation we cannot say the taxing statute denies
Second. The objection chiefly urged to the taxing statute is
that it is a denial of due process of law because in 1935 it imposed
a tax on income received in 1933. But a tax is not necessarily unconstitutional
because retroactive. Milliken v. United States,
283 U.S. 15, 21 , 51 S.Ct. 324, 326, and cases cited.
Taxation is neither a penalty imposed on the taxpayer nor a liability
which he assumes by contract. It is but a way of apportioning the
cost of government among those who in some measure are privileged
to enjoy its benefits and must bear its burdens. [305
U.S. 134, 147] Since no citizen enjoys immunity from
that burden, its retroactive imposition does not necessarily infringe
due process, and to challenge the present tax it is not enough to
point out that the taxable event, the receipt of income, antedated
In the cases in which this Court has held invalid the taxation
of gifts made and completely vested before the enactment of the
taxing statute, decision was rested on the ground that the nature
or amount of the tax could not reasonably have been anticipated
by the taxpayer at the time of the particular voluntary act which
the statute later made the taxable event. Nichols v. Coolidge,
274 U.S. 531, 542 , 47 S.Ct. 710, 713, 52 A.L.R. 1081; Untermyer
276 U.S. 440, 445 , 48 S.Ct. 353, 354 (citing Blodgett v. Holden,
275 U.S. 142, 147 , 48 S.Ct. 105, 106); Coolidge v. Long,
282 U.S. 582 , 51 S.Ct. 306. Since, in each of these cases,
the donor might freely have chosen to give or not to give, the taxation,
after the choice was made, of a gift which he might well have refrained
from making had he anticipated the tax, was thought to be so arbitrary
and oppressive as to be a denial of due process. But there are other
forms of taxation whose retroactive imposition cannot be said to
be similarly offensive, because their incidence is not on the voluntary
act of the taxpayer. And even a retroactive gift tax has been held
valid where the donor was forewarned by the statute books of the
possibility of such a levy, Milliken v. United States, supra. In
each case it is necessary to consider the nature of the tax and
the circumstances in which it is laid before it can be said that
its retroactive application is so harsh and oppressive as to transgress
the constitutional limitation.
[Welch v. Henry, 305
U.S. 134, 146 (1938)]
Milwaukee v. White, 296 U.S. 268 (1935)
“Even if the judgment is deemed to be colored by the nature of
the obligation whose validity it establishes, and we are free to
re-examine it, and, if we find it to be based on an obligation penal
in character, to refuse to enforce it outside the state where rendered,
see Wisconsin v. Pelican Insurance Co.,
127 U.S. 265 , 292, et seq. 8 S.Ct. 1370, compare Fauntleroy
210 U.S. 230 , 28 S.Ct. 641, still the obligation to pay
taxes is not penal. It is a statutory liability, quasi contractual
in nature, enforceable, if there is no exclusive statutory remedy,
in the civil courts by the common-law action of debt or indebitatus
assumpsit. United States v. Chamberlin,
219 U.S. 250 , 31 S.Ct. 155; Price v. United States,
269 U.S. 492 , 46 S.Ct. 180; Dollar Savings Bank v. United States,
19 Wall. 227; and see Stockwell v. United States, 13 Wall. 531,
542; Meredith v. United States, 13 Pet. 486, 493. This was the rule
established in the English courts before the Declaration of Independence.
Attorney General v. Weeks, Bunbury's Exch. Rep. 223; Attorney General
v. Jewers and Batty, Bunbury's Exch. Rep. 225; Attorney General
v. Hatton, Bunbury's Exch. Rep.
U.S. 268, 272] 262;
Attorney General v. _ _, 2 Ans.Rep. 558; see Comyn's Digest (Title
'Dett,' A, 9); 1 Chitty on Pleading, 123; cf. Attorney General v.
Sewell, 4 M.&W. 77. “
[Milwaukee v. White,
296 U.S. 268 (1935)]
Cooley, Law of Taxation, 4th Ed., pgs 88-89
is not regarded as a debt in the ordinary sense of that term, for the
reason that a tax does not depend upon the consent of the taxpayer and
there is no express or implied contract to pay taxes. Taxes are not
contracts between party and party, either express or implied; but they
are the positive acts of the government, through its various agents,
binding upon the inhabitants, and to the making and enforcing of which
their personal consent individually is not required."
Law of Taxation, 4th Ed., pgs 88-89]
Papers, No 45 (Jan. 1788):
It is true, that
the Confederacy is to possess, and may exercise, the power of collecting
internal as well as external taxes throughout the States; but it is
probable that this power will not be resorted to, except for supplemental
purposes of revenue; that an option will then be given to the States
to supply their quotas by previous collections of their own; and that
the eventual collection, under the immediate authority of the Union,
will generally be made by the officers, and according to the rules,
appointed by the several States. Indeed it is extremely probable, that
in other instances, particularly in the organization of the judicial
power, the officers of the States will be clothed with the correspondent
authority of the Union.
Should it happen,
however, that separate collectors of internal revenue should be appointed
under the federal government, the influence of the whole number would
not bear a comparison with that of the multitude of State officers in
the opposite scale.
Within every district
to which a federal collector would be allotted, there would not be less
than thirty or forty, or even more, officers of different descriptions,
and many of them persons of character and weight, whose influence would
lie on the side of the State. The powers delegated by the proposed Constitution
to the federal government are few and defined. Those which are to
remain in the State governments are numerous and indefinite. The former
will be exercised principally on external objects, as war, peace, negotiation,
and foreign commerce; with which last the power of taxation will, for
the most part, be connected. The powers reserved to the several States
will extend to all the objects which, in the ordinary course of affairs,
concern the lives, liberties, and properties of the people, and the
internal order, improvement, and prosperity of the State. The operations
of the federal government will be most extensive and important in times
of war and danger; those of the State governments, in times of peace
and security. As the former periods will probably bear a small proportion
to the latter, the State governments will here enjoy another advantage
over the federal government. The more adequate, indeed, the federal
powers may be rendered to the national defense, the less frequent will
be those scenes of danger which might favor their ascendancy over the
governments of the particular States. If the new Constitution be
examined with accuracy and candor, it will be found that the change
which it proposes consists much less in the addition of NEW POWERS to
the Union, than in the invigoration of its ORIGINAL POWERS. The regulation
of commerce, it is true, is a new power; but that seems to be an addition
which few oppose, and from which no apprehensions are entertained. The
powers relating to war and peace, armies and fleets, treaties and finance,
with the other more considerable powers, are all vested in the existing
Congress by the articles of Confederation. The proposed change does
not enlarge these powers; it only substitutes a more effectual mode
of administering them. The change relating to taxation may be regarded
as the most important; and yet the present Congress have as complete
authority to REQUIRE of the States indefinite supplies of money for
the common defense and general welfare, as the future Congress will
have to require them of individual citizens; and the latter will be
no more bound than the States themselves have been, to pay the quotas
respectively taxed on them. Had the States complied punctually with
the articles of Confederation, or could their compliance have been enforced
by as peaceable means as may be used with success towards single persons,
our past experience is very far from countenancing an opinion, that
the State governments would have lost their constitutional powers, and
have gradually undergone an entire consolidation. To maintain that such
an event would have ensued, would be to say at once, that the existence
of the State governments is incompatible with any system whatever that
accomplishes the essential purposes of the Union.
Federalist Papers, No 45 (Jan. 1788)]